In the fight against the Corona crisis, the EU is taking on its own debts for the first time: Who will get the 750 billion euros? How is the money paid back? Who negotiated what in Brussels?? https://yatto.ru answers the most important questions.
What was decided at the EU summit?
The EU summit agreed on two major issues: Corona help for economically troubled states in a total amount of 750 billion euros as well as the multiannual financial framework of the EU budget. This is about the funds that will be available to the EU from 2021 to 2027. A total of 1074 billion euros is planned for this.
What exactly does the Corona aid look like??
The special fund of 750 billion euros is divided into two parts. First: 390 billion euros in grants for countries that have got into economic difficulties. Second: 360 billion, which will be given out as loans. Originally the EU had aimed to provide 500 billion in grants and 250 billion in loans. However, this failed due to the resistance of several states, including Austria and the Netherlands.
How is the money from the Corona special fund distributed??
70 percent of the total should be spent in 20, 30 percent are reserved for 2023. The distribution depends primarily on how badly the economy collapses in 20. In 2022 the payments for 2023 will be checked again. The states concerned should submit their own plans for its use, which the EU Commission will then examine within two months. The criteria are based on the country-specific recommendations that the EU Commission already draws up.
A prerequisite for the release of the funds should be that the money is also used for climate protection and digitization projects. The EU governments then have to approve the Commission’s decision with a qualified majority. This is to guarantee that the grants do not simply flow into the normal budget of the EU states. If "one or more" governments have doubts, they can request a debate at the next EU summit.
Where does the money for corona aid come from?
For the first time, the EU Commission is allowed to take on large amounts of debt. The bonds over 750 billion euros are offered on the financial markets and can be bought there. The move is being followed with enthusiasm on the stock exchange, reports Samir Ibrahim from the ARD stock exchange studio. The German government had emphasized that the uniqueness of the crisis justified this one-off action. This should not be an entry into a "debt union".
How is the money paid back?
The repayment is expected to begin before 2027 and run until 2058. So that the repayment of the large sum from the EU budget does not paralyze the normal work of the EU, the EU receives its own sources of income. To this end, a plastic tax on non-recyclable plastic is to be introduced in early 2021. The "Suddeutsche Zeitung" reports that EU governments should transfer 800 euros to Brussels for every ton of non-recyclable plastic packaging waste.
In addition, the EU Commission will work out plans for a digital tax and a so-called CO2 border tax. These are to be introduced "by 2023 at the latest". The border tax is levied on imports from countries that do not have strict climate protection requirements like the EU. This is intended to guarantee a level playing field for EU companies, especially since the EU is also planning to increase CO2 pollution prices. In addition, air and shipping traffic is to be included in emissions trading. A financial transaction tax will be introduced as the EU’s own source of income.
What decisions were made about the EU budget?
The EU summit was not only about corona financial aid, but also about the multiannual financial framework of the EU budget for the years 2021 to 2027. In order to reach the total of 1,074 billion euros after the departure of Great Britain, a new burden sharing had to be made her: That is why payments, especially those of net contributors like Germany, will increase sharply in the coming years.
What will happen to the discount system??
Five states receive a discount on their budget contributions. In addition to Germany, these are Austria, the Netherlands, Denmark and Sweden. The latter appeared as the "thrifty four" at the summit and received increased discounts in return for agreeing to corona grants. For example, the annual discount amount for Austria was increased from 237 million euros to 565 million euros, which corresponds to an increase of 138 percent. The Netherlands are now to receive a discount of 1.92 billion euros annually. This is 345 million euros more than planned before the summit. Sweden is to receive a discount of 1.07 billion euros per year, 271 million more than previously planned.
Germany also benefits from the discount system. However, the total remains unchanged at 3.67 billion euros per year. In the course of the negotiations at the EU summit, Chancellor Angela Merkel secured additional funds from Brussels in another way: As the final document of the meeting shows, Germany is to receive an additional 650 million euros for eastern German regions from the next seven-year financial framework "To promote competitiveness, growth and job creation". Another 650 million euros are earmarked for rural development.
What about the rule of law??
One of the central points of contention in the extremely difficult negotiations had revolved around the problem of the rule of law. Many member states had demanded that the payment of EU funds must be linked to compliance with the rule of law. Some Eastern European countries, including Hungary and Poland, had vehemently opposed such a link.
Critics accuse Hungary and Poland of violating fundamental freedoms and the corrupt handling of EU aid funds. A fundamental rights procedure is therefore underway against both countries in accordance with Article 7 of the EU treaties. The question of linking EU payments to the rule of law was ultimately resolved at the summit with a compromise formula. In the future, the Commission should propose measures in the event of violations, which the EU states would then have to adopt with a so-called qualified majority (this requires 55 percent of the EU countries with 65 percent of the total population).
While EU representatives praised the compromise as effective, the Polish news agency PAP quoted Polish government sources as saying that the link between EU funds and compliance with the rule of law had been removed. Hungarian media celebrated the deal as a victory for Prime Minister Viktor Orban.